Legislation upsets Alabama contractors

Bill up for vote pits larger contractors against others

By Phillip RawlsThe Associated Press

Published: Tuesday, April 2, 2013 at 3:30 a.m.

Last Modified: Monday, April 1, 2013 at 11:53 p.m.

MONTGOMERY | With the construction business struggling to recover from the recession, contractors in Alabama are fighting over legislation that would allow the construction of public buildings without going through the traditional competition with sealed bids.

A bill awaiting a vote Thursday in the Senate Commerce, Transportation and Utilities Committee would create a new option. A government agency would pick a construction manager and then agree on a maximum price for a project. If the project came in over the maximum price, the construction manager would have to pick up the extra cost, rather than the government entity.

“Contractors on the job have a little more skin in the game, which will give the taxpayer the best value,” said Jay Reed of Birmingham, president of Associated Builders and Contractors of Alabama, which is backing the legislation.

The bill has become one of the most contentious issues in the 2013 session, pitting large contractors against some medium and small contractors.

The construction industry’s economic recovery is going slowly. The state Department of Labor reported 79,100 workers on construction jobs statewide in February. That’s down from 80,600 in February 2012 and from 110,602 in February 2007.

Opponents say the legislation will benefit the largest contractors with big marketing budgets and staffs. They also say it opens the door to no-bid deals, like the state warehouse construction project that led to guilty pleas by Montgomery lobbyist Lanny Young and one of Gov. Don Siegelman’s top aides, Nick Bailey, in 2003.

“It’s basically the same thing. From a taxpayers’ standpoint, it’s a bad bill,” said Brad Norris, secretary-treasurer of Norris Building Co. in Montgomery.

Reed said it’s an open process used by many states for projects that are complicated, involve historic preservation or have a short deadline. It would be an alternative to the traditional method of the government entity seeking sealed bids and then awarding the project to the lowest responsible bigger. It would be used on buildings, but not roads and bridges.

Called “construction manager at risk,” the bill provides for a public board or agency to prequalify construction management companies. Each one would submit a proposal, and the government entity would pick a winner based on several factors, including experience and personnel. Then the government entity and the top-ranked company would work on building plans together and negotiate a contract. Reed said the legislation limits the amount of the actual work that the construction manager can do on the project, which would allow for plenty of subcontractors, and it requires that all proceedings and records must be public.

Jeff Rogers, a manager of Alabama Associated General Contractors, said the selection process still allows subjectivity. His organization is pushing for a threshold of $25 million that projects would have to exceed before using the construction manager at risk. Rogers said that would allow smaller general contractors to continue to bid for smaller projects, which kept many of them afloat during the recession.

Reed said his group is opposed to a permanent threshold because if the new method is good for a project over $25 million, then it should be as worthwhile for a smaller one.

The sponsor, Republican Sen. Slade Blackwell of Mountain Brook, said he believes the bill will end up with a threshold, and that it will get approved by the Legislature once that happens. He predicts it will be used for complicated projects, like a research building at a university or a sports arena, but not for routine projects, like a parking deck or addition to city hall.

Blackwell has come under criticism from opponents because ABC’s political action committee was a major donor in 2010, providing him with $100,000 in the Republican primary, where he upset an incumbent.

Blackwell, who is in the medical real estate business, said his sponsorship is based on the bill’s merits. “It’s been done in the business world for 30 years. You can save tons of money and time on the length of a project,” he said.

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